Bloomberg News

Ruble Rises to Eight-Month High, Extending Gain on Oil, Rates

January 22, 2013

The ruble headed for the strongest level since May as oil traded close to a four-month high and the government signaled the central bank is resisting an interest rate cut.

Russia’s currency strengthened 0.3 percent to 30.1780 per dollar by 11:57 a.m. in Moscow. The ruble was little changed versus the euro at 40.333, leaving it up less than 0.1 percent against Bank Rossii’s target dollar-euro basket at 34.7489.

Crude oil, Russia’s biggest export, gained 0.2 percent in New York to $95.70. Bank Rossii is resisting the government’s calls to cut interest rates, First Deputy Prime Minister Igor Shuvalov said in a Jan. 18 interview. Russia’s central bank left borrowing costs unchanged this month after unexpectedly raising rates in September.

“Ruble appreciation is logical and justified given the level of the oil prices and the relatively high domestic interest rates,” Denis Korshilov, head of fixed income, currencies and commodities of Citigroup Inc. in Moscow, said by phone.

The yield on Russia’s ruble bond due February 2027 declined one basis point to 7 percent.

“Euroclear’s concerns regarding the start of operations in the local market are likely to be resolved successfully,” Maxim Oreshkin, analyst at VTB Capital, said in an e-mailed note. “We believe it makes sense to pay attention to long-term OFZs.”

The yield on the notes, known as OFZs, is up 16 basis points from a Jan. 10 low of 6.84 percent amid concern direct settlement of local debt through systems including Euroclear Bank SA may be delayed.

There are no obstacles stopping Euroclear from working in Russia and the country’s market watchdog was due to send the world’s biggest bond settlement system a written response to a clarification request on Jan. 19, the Federal Financial Markets Service said last week.

To contact the reporter on this story: Vladimir Kuznetsov in Moscow at vkuznetsov2@bloomberg.net

To contact the editor responsible for this story: Wojciech Moskwa at wmoskwa@bloomberg.net


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